The USDA’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report yesterday, which noted that, “The corn price, at $3.57 per bushel, is down 9 cents from last month and 22 cents below February 2015.”
The NASS report added that, “The soybean price, at $8.51 per bushel, decreased 20 cents from January and $1.40 from February a year earlier.”
Donnelle Eller reported on the front page of the business section in today’s Des Moines Register that, “Iowa farmland values have dropped nearly 9 percent over the past year, reflecting lower farm income and commodity prices, a farm real estate group said Wednesday.
“The Iowa Realtors Land Institute farmland survey through March shows the average value of cropland fell to $6,732 an acre, 8.7 percent lower less than a year ago.”
Ms. Eller explained that, “It’s a 22.5 percent decline from 2013, when values climbed to a record $8,690 an acre and U.S. income climbed to $123 billion.”
The Register article noted that, “‘Farm incomes have been dropping, but land values haven’t dropped to the same degree,’ said Steve Bruere, president of Peoples Co., a Clive brokerage and farm management business.
As commodity prices falter and profit margins remain thin, U.S. agricultural producers will be eager to minimize costs of production in 2016. News reports have indicated that some producers are already cutting back on spending for seed and fertilizer.
With respect to interest rates, Binyamin Applebaum reported in today’s New York Times that, “Janet L. Yellen, the Federal Reserve chairwoman, said on Tuesday that the United States economy remained on track despite a rough start to the year because the drag from weak growth in other countries was being offset by lower borrowing costs.
“Ms. Yellen told the Economic Club of New York that the economy ‘had proven remarkably resilient,’ and that the Fed expected better days ahead. She said the Fed still intended to pursue a careful, patient course toward higher interest rates as the economy improved.
“The cautious tone of her remarks, however, suggested no rate increase was likely at the Fed’s next meeting, in April, shifting the eyes of Fed watchers to its subsequent meeting in June.”
The Times article explained that, “The Fed’s policy-making committee indicated after its most recent meeting, this month, that it now expected to raise rates by about half a percentage point this year.
“That was half as much as the Fed had predicted at the beginning of the year.
“Ms. Yellen attributed the deceleration on Tuesday to a judgment by Fed officials that somewhat lower rates were necessary to maintain steady growth.”
And David Harrison and Michael S. Derby stated in today’s Wall Street Journal that, “Global economic and financial uncertainty poses risks to the U.S. economy and justifies a slower path of interest-rate increases, Federal Reserve Chairwoman Janet Yellen said in remarks that suggested little appetite to raise rates when officials meet next month.”
Jesse Newman reported yesterday at The Wall Street Journal Online that, “U.S. farmers are expected to plant more corn and soybeans this year even as their storage bins remain stuffed with rising inventory, according to analysts surveyed by The Wall Street Journal.
“The U.S. Department of Agriculture on Thursday will release two closely watched reports on domestic crop stockpiles and farmers’ planting intentions, against a backdrop of historically high global supplies and pressure on U.S. exports caused in part by the strength of the U.S. dollar.”
Ms. Newman noted that, “Analysts expect USDA to estimate that farmers will plant 90.05 million acres of corn, up about 2% from nearly 88 million last year.
“The USDA likely will peg soybean acres at 82.95 million acres, up 0.4% from 82.65 million last year, while all-wheat acreage likely will be estimated at 51.66 million acres, down 5% from 54.64 million in 2015, according to the survey.”
With this background in mind, Bloomberg writer Alan Bjerga indicated yesterday that, “Illinois farmer David Erickson admits that what he and many U.S. farmers are about to do doesn’t seem to make much sense. With bulging stockpiles of corn and soybeans left over from last year’s harvest, they’re planting more in 2016 — even though the crops probably won’t be profitable.”
The Bloomberg article noted that, “After record prices in 2012 sparked a boom in output, corn and soybeans in the Midwest now fetch less than the cost to produce them, and U.S. farm income is headed for a 14-year low. While the market has improved in recent months, researcher AgResource Co. still estimates a $50 loss for every acre sown on average. As they seed more, growers have cut spending and hope better-than-normal yields will help them at least break even.
“Farmers in the U.S., the world’s biggest grower, will expand corn planting to 89.998 million acres, up 2.3 percent from a six-year low in 2015, and soybeans will be sown on 83.07 million acres, the second-most ever, a Bloomberg survey of 33 analysts showed. The U.S. Department of Agriculture will disclose its planting and stockpile estimates on Thursday.”
Mr. Bjerga added that, “With few appealing options, David Seil chose to expand corn planting on his 1,300-acre farm near Gowrie, Iowa. Rather than sacrifice productive land by using it as pasture for his cattle, he’s cutting back on spending for seed and fertilizer and hoping that weather damages crops somewhere else so that prices go up.”
Pat Westhoff, the director of the Food and Agricultural Policy Research Institute at the University of Missouri, indicated in a column on Saturday that, “In the 1980s, farm financial stress was severe. Farm income was low, debt rose to unsustainable levels and a wave of bankruptcies contributed to a crash in farmland values.
“This is not the 1980s. The ratio of farm debts to farm assets is much lower now than it was in 1985. Interest rates are far lower, and very few farms are behind on debt payments.
“However, these are difficult times for many U.S. farmers and ranchers.Net farm income is less than half the record level of 2013. Prices are down for almost every major farm commodity, from corn, soybeans and wheat to cattle, hogs and milk.”
Dr. Westhoff added that, “Each year, our institute puts together a 10-year outlook for the U.S. farm economy. Our March 2016 outlook tells the same story we’ve been telling for some time — more tough times are ahead.
“After peaking at $6.89 per bushel for the crop harvested in the drought year of 2012, corn prices have averaged less than $4 per bushel for the past two years. We expect more of the same. Similar stories hold true for soybeans, wheat, sorghum, cotton, rice and almost every other major crop grown in this part of the country.”
Saturday’s column also noted that, “[R]eductions in production costs and the increase in [federal government] payments are not nearly enough to offset the decline in sales receipts. That’s why net farm income has decreased so sharply.”
In a related item regarding the 1980s, DTN Farm Business Advisor Danny Klinefelter noted in an article this week that, “Financial watchdogs are still smarting from the 2008 financial crisis and don’t want to be behind the curve this time. They’ve imposed stricter risk-based capital requirements, more burdensome documentation and more proactively aggressive monitoring. Risk can originate from weaker borrower financial condition, more carryover debt, concentration in the lender’s portfolio and increased counter-party risk (say when a vendor or supplier fails, causing a domino effect on customers).
“Fortunately — as opposed to the 1980s farm financial crisis — ag banks and the Farm Credit System haven’t been responsible for overly aggressive lending. Many have required down payments as large as 50% on farm mortgages. Much of what caused land values rising above amounts lenders would finance has been the result of borrowers pledging other debt-free assets to secure the loan; they’ve used their own money (liquidity) to pay prices above the lendable value of the land purchased.”
Meanwhile, Reuters writers Tom Polansek and Karl Plume reported today that, “Three years into a grain market slump, U.S. farmers are set to plant more corn, taking a calculated gamble that higher sales will help them make up for falling prices without triggering even more declines.
“Forecasts suggest that at current prices growers will be able to cover their variable expenses such as seed and fertilizer. By planting more and scrimping on everything from labor to crop chemicals, farmers hope to cover a portion of hefty fixed costs, including land rents.
“Their strategy marks a reversal from the last time that prices for corn, soybeans and wheat fell for three years running in mid-1980s. At that time, farmers cut production and prices began rising.”
The Reuters article added that, “Barring a weather disaster, more corn planted means a bigger harvest that will add to massive global crop inventories that have kept prices below break-even levels. The swollen stockpiles also make any price recovery unlikely even if U.S. output were to decline.
“With no rebound in sight, cranking up production might be the best shot U.S. farmers have at balancing their books in a falling market, economists say.”
Greg Trotter reported late last week at the Chicago Tribune Online that, “Immediately after U.S. Secretary of Agriculture Tom Vilsack concluded his remarks at the Good Food Festival in Chicago Thursday, he was approached by a couple of admirers — and one ardent supporter of GMO labeling who wanted to bend the politician’s ear.
“The debate on labeling products that contain GMOs — genetically modified organisms — has roiled the food and agriculture industries in recent weeks. Many consumers say they have a right to know what’s in their food; those opposed to labeling say it gives the wrong impression the food is unsafe.”
The article noted that, “In a brief interview, Vilsack, a former two-term governor of Iowa, lamented the debate that’s divided the farming community.”
“A: I’m disappointed because I think it’s an opportunity at this point in time to bring agriculture together as opposed to continuing this dispute within agriculture.
“So it was a disappointment in that respect. I think it’s also going to create a confusing mixture of ways in which individual companies and individual states are going to approach this issue. I think it begs for some sort of standardization. And I’m hoping that despite the setback that folks in the Senate don’t stop working on this issue and figure out a way to reach common ground.
“Q: Do you think that’s realistic before July 1, before Vermont’s law goes into effect?
“A: I think it’s certainly possible and doable if people spend the time and are willing to understand that they’re not going to get everything they want. That’s the nature of compromise. We seem to have lost the art of compromise in this country, which I think is unfortunate.”
(Recall that Sen. Chuck Grassley (R., Iowa) has noted that it will be difficult to reach an agreement before this summer).
During the Tribune “Q and A” Sec. Vilsack also stated that, “We need to increase innovation and productivity here and around the world, in order to meet the demand for food. I don’t think there’s a full appreciation for how much food we’re going to have to produce to be able to feed 9 billion people. … (Global food security) is an enormous problem that we have got to face and America’s got to lead. And America is leading, but part of that is making sure we have adequate resources and agricultural research.”
DTN Markets Editor Katie Micik reported today that, “Farmers’ feelings about the ag economy continue to fade while agribusinesses’ sentiment took a steep dive, according to the latest results of the DTN/The Progressive Farmer Agriculture and Agribusiness Confidence Indexes.
“The latest reading of the DTN/The Progressive Farmer Agriculture Confidence Index came in at 91.5, the lowest since DTN began surveying farmers in 2010.
“That compares to an index value of 92.7 in December and 98.8 in March 2015. An index value of 100 is considered neutral, while higher values indicate optimism and lower values reflect pessimism.”
The DTN article stated that, “Experts estimate the average Kansas farmer’s net income for 2015 will see a loss of $30,000. The forecast is for more of the same in 2016.”
Ms. Micik added that, “The Agribusiness Confidence Index came in at 83.4, down more than 15 points from December’s 98.3 reading and more than 21 points from the previous March’s 104.7 reading.”
University of Illinois agricultural economist Gary Schnitkey indicated recently at the farmdoc daily blog (“Downward Pressures on 2016 and 2017 Cash Rents“) that, “Cash rents on professionally-managed farmland decreased in 2016. In 2017, pressures to lower cash rents will intensify if commodity prices do not increase. In this article, a table is presented that summarizes cash rents for professionally managed and ‘average’ farmland in Illinois for 2014 through 2016. The 2016 cash rents for ‘average’ farmland is a projection.”
In his farmdoc update, Dr. Schnitkey explained that, “Downward pressures will be placed on 2017 cash rents, particularly if commodity prices remain low. Professional farm managers were asked how much they anticipated cash rents to change in 2017 if conditions remain the same as they are currently. When asked, corn prices were near $3.60 per bushel and soybean prices were near $8.70 per bushel. Of the farm managers responding to the survey, 41% expected cash rents to decrease between $25 and $50 per acre while 50% expected decreases in the $5 to $25 per acre range. Only 9% expected cash rents to remain the same, and none expected rents to increase. These expectations point to larger increases in 2017 than in 2016.
“Much of the reason for this downward pressure is because farmers are projected to have losses in 2017 on cash rent farmland.”
Recall that earlier this month, The Des Moines Register reported that, “Faced with declining profits, some Iowa farmers are defaulting on cropland rents — a largely unheard of move given the intense competition for the state’s fertile farmland and a sign that financial pressure and debt are mounting.
“With farm real estate debt across the United States at its highest levels since the farm crisis years of the early ’80s, farmers are increasingly nervous about trying to turn a profit while paying sky-high rents.”
In a related item, a news release earlier this week from AgriBank stated that, “Commodity prices are the greatest challenge facing agricultural producers in 2016, according to a poll of Farm Credit directors from America’s heartland.”
Meanwhile, DTN Special Correspondent Elizabeth Williams provided an interesting look at how some producers are coping with lower commodity prices in an article from yesterday (“The Hunt for Profits“).
Ms. Williams stated that, “Tumbling commodity profits have producers scurrying for ways to pump up their bottom line. After controlling costs and better marketing, conventional farmers are looking at other alternatives to bring in extra cash. Organic crops perhaps?”
The DTN article added that, “You can get $8.50 per bushel for organic corn (when conventional corn is selling for $3.80). Organic soybeans can bring $20 per bushel and organic wheat is currently priced around $8 per bushel, according to the Agricultural Marketing Service’s latest bi-weekly report. Those prices have plunged significantly since 2014, but still appear enough to encourage more organic acres.
“Compared with conventional farming, the cost of production for organic commodities can run as low as $5 to $10 per acre more, reported Lynn Clarkson of Clarkson Grain, which buys organic grain and oilseeds, in Cerro Gordo, Illinois. (However, total economic costs of organic compared with conventional production were roughly between $83 and $98 per acre higher for corn, a national 2015 USDA study estimated.)”
The DTN article also pointed out that, “Because organics are still a niche market, you should price your grain or oilseed before you plant it. There are several companies that work on a broad scale such as Clarkson Grain, Scoular Grain, SunOpta and SK Food. You can contact the Organic Trade Association at www.ota.com for resources in your area.”
Bloomberg writers Craig Giammona and Alan Bjerga reported this week that, “The second-smallest U.S. state is forcing a big change in the food industry.
“Kellogg Co., Conagra Foods Inc. and Mars Inc. all announced this week that they will start putting labels on all products made with genetically modified organisms. They followed Campbell Soup Co. and General Mills Inc. in preparing for the July 1 implementation of a Vermont law that requires the change. Creating labels for only one state isn’t feasible, so all packaging has to be overhauled nationwide, executives say.
“Food companies and agribusinesses have spent tens of millions of dollars fighting state ballot initiatives to require GMO labels, hoping to avoid a state-by-state patchwork of laws they argue would be expensive and burdensome. Big Food lobbied Congress for a federal solution but acquiesced to Vermont after a bill died in the U.S. Senate last week amid a partisan stalemate. That means a state with fewer than 630,000 residents is setting the course for a nation of 322 million.”
The Bloomberg writers explained that, “Even as the industry prepares to meet the requirements of the Vermont law, companies like General Mills, Conagra and Kellogg are holding out hope that Congress will find a compromise and establish a federal standard when legislators return from Easter break next month. [Note a related update about the potential difficulty of reaching a compromise in the Senate may be.] Absent that, the concern is that other states will enact laws that are similar but not identical. In that scenario, labels in Vermont might not be compliant with what’s required in other states, said Ken Powell, the chief executive officer of General Mills.
“Kellogg joined General Mills is arguing that creating labels for a single state won’t work. It’s impossible to isolate Vermont in a distribution system designed for interstate commerce, according to Powell.”
Financial Times writer Shawn Donnan reported today that, “Barack Obama’s historic visit to Cuba this week has been rich in symbolism, but even as the president has lifted restrictions on American companies to do business with the Caribbean nation, one key constituency remains frustrated: the powerful US agriculture lobby.
“Agriculture-related exports to the island, which sits just 90 miles off the Florida coast, have been allowed under US law since 2001 and with Cuba importing 80 per cent of its food, Washington is eager to penetrate a market officials say is worth $2bn a year.”
The FT article explained that, “But after peaking at more than $710m in 2008, US agricultural exports to the country have been steadily falling ever since. Last year they were worth just $180m, according to US trade statistics, giving the US less than 10 per cent market share and leaving it behind Brazil, the EU and Argentina as a source for food in Cuba.
“In an effort to turn that round, the US and Cuba on Monday are set to agree to increase their co-operation on agriculture and improve their technical links. The US is also due to lift restrictions on growers using special research and marketing bodies to pitch their products in Cuba.”
Today’s article pointed out that, “However, the steps do not address the financial restrictions that remain on Cuban buyers of US agricultural products and are thus unlikely to do much in the short term to increase US exports to the Caribbean island.
“Although Cuban buyers have since January been able to use US banks to finance purchases of other imports, those wanting to buy crops or meat produced in the US still have to pay cash up front or use a third-party bank.
“Such restrictions are codified into US law and cannot be lifted by executive order, the tool on which Mr Obama has relied to push through his change in Cuba policy. With the Republicans who control Congress determined not to remove the longstanding US trade embargo, that has left the Obama administration’s hands tied and the US agriculture lobby frustrated.”
In conclusion, today’s article stated that: “Mr Obama is making history and US chicken, pork, wheat and soyabean farmers are eager to take advantage. But for the time being, Republicans seem distinctly unwilling to play along.”
Finally got wifi today in Havana. Another reason to lift embargo! Headed to meeting w/AG Secr Vilsack about new Ag agreement btwn 2 nations.
Annie Gasparro reported yesterday at The Wall Street Journal Online that, “General Mills Inc. is changing its labels nationwide to indicate whether its foods contain genetically modified organisms, ahead of a Vermont law that will mandate it as of July.
“‘The complexity and the cost of having one system for Vermont and one for everywhere else is untenable,’ Jeff Harmening, the company’s chief operating officer of U.S. retail, said in an interview.
“He said he is still hopeful that Congress will pass a national law that would supersede such state laws, but the company had to move ahead to comply with Vermont.”
The article explained that, “Two years ago, the Vermont legislature passed a bill that made it the first state to require food makers to label products made with the technology. It stemmed from consumer backlash as some people raised concerns about their safety and environmental impact.”
Ms. Gasparro also reminded readers that, “General Mills’ decision comes after a federal bill that would pre-empt any state law on GMO labeling stalled on a procedural hurdle in the Senate two days ago, shortly before lawmakers left Washington for a two-week recess. Congressional aides were expected to continue the negotiations during the break.”
The Journal article added that: “The Vermont law applies only to packaged foods that contain GMO ingredients and fresh produce sold at retail outlets in the state. It doesn’t apply to meat and dairy products made from animals that consume GMO feed.”
On Thursday and Friday, the House Agriculture Committee held hearings “examining USDA organization and program administration.”
A Committee news release on Thursday noted that, “USDA officials from the Food, Nutrition and Consumer Services (FNCS), Food Safety (FS), and Rural Development (RD) mission areas served as witnesses.
“This hearing series follows a similar series the committee held with USDA last fall. By setting aside two days each year to focus on examining each of USDA’s seven mission areas and their respective agencies, members of the committee gain a fuller understanding of how the various parts of USDA work together to achieve the department’s purpose and goals.”
Recall that nutrition programs comprise the largest percentage of Farm Bill spending.
In prepared remarks on Thursday, USDA Under Secretary for Food, Nutrition and Consumer Services Kevin Concannon, indicated that, “As this Committee continues to review SNAP [food stamps], I want to speak candidly about the proposal raised by some to change SNAP into a block grant provided to States; such a change would have significant and negative consequences for the SNAP program. A block grant structure would significantly erode SNAP’s responsiveness to those it serves and ultimately be a step backwards in the national fight against hunger.”
Mr. Concannon added that, “While flexibility is critical to ensuring that States can meet the needs of their residents facing difficult circumstances, members of this Committee have criticized States for how they have used their flexibility, and sought to constrain it in certain areas. The most notable of these is States use of broad-based categorical eligibility, an option by which States extend eligibility to households that receive a non-cash benefit funded by TANF. Conversely, there are examples where States are not taking options favored by the Committee. The Agricultural Act of 2014 codified existing FNS rulemaking that allows States the option to withhold issuing replacement cards to households with excessive requests, defined as five or more in a year. FNS provided States this option as excessive card replacements may be an indicator of potential benefit trafficking. To date, only three States – Iowa, Massachusetts, and Michigan –have adopted this State option.”
Mr. Colcannon also noted that, “As vital as the program is to so many, we can all agree that it would be better if fewer families needed to utilize SNAP because poverty and need were lower. And while the trends are pointing in the right direction – we are currently projecting a 2.3 percent decrease in participation for Fiscal Year 2017 – some ask, why haven’t we made more progress in reducing the need for SNAP, given the reductions in unemployment in recent months?
“While overall unemployment has declined, unemployment rates for some workers remain far higher than average. Bureau of Labor Statistics data show that unemployment rates for high school graduates are substantially higher than for college graduates. Workers without high school diplomas are even more likely to be unemployed, and their wages are likely to be far lower than those with more education. Furthermore, some citizens have trouble entering the labor force because of criminal records or other problems from years past. And, many who have jobs do not get the hours and wages they need to meet their food needs but may not be eligible for many other forms of assistance. SNAP is also serving more eligible people because of State and USDA efforts to streamline the program to ensure that those who need benefits are able to access the program with less hassle and paperwork.”
In a news release yesterday, the Ag Committee noted that, “Today, the House Agriculture Committee completed its two-day examination of the USDA’s organization and program administration. Over the past two days, members of the committee heard from 25 undersecretaries, administrators, and other department officials across USDA’s seven mission areas, on a variety of topics, which included an accounting for each area’s purpose and goals, programs administered, and annual budget.”
Witnesses testifying on Friday included, “USDA officials for the Natural Resources and Environment (NRE), Farm and Foreign Agricultural Services (FFAS), Research, Education and Economics (REE), and Marketing and Regulatory Programs (MRP) mission areas.”
As was noted in an earlier FarmPolicy update, the administrations proposed cuts to crop insurance were highlighted on Thursday at the House Agriculture Appropriations Subcommittee.
In prepared remarks on Friday, USDA Deputy Under Secretary for Farm and Foreign Agricultural Services, Alexis Taylor, indicated that, “The Federal crop insurance program is a vital risk-mitigation tool available to our Nation’s agricultural producers. It provides risk management solutions that are market driven and reflect the diversity of the agricultural sector, including specialty crops, organic agriculture, forage and rangeland, as well as staple row crops.
“Over its history, the value of the Federal crop insurance program to American agriculture has grown. In 2015, the crop insurance program provided coverage on more than 298 million acres of farm and ranch land and protected over $102 billion of agricultural production. As of February 25, 2016, indemnity payments to producers on their 2015 crops total just over $5.6 billion on a premium volume of just under $10 billion. Our current projection for the 2016 crop year shows the value of protection will be slightly less than $100 billion.”
Ms. Taylor added that, “Incentives authorized in the 2014 Farm Bill make crop insurance more affordable for beginning farmers and ranchers by providing a 10 percent premium discount, as well as a waiver of the catastrophic and additional coverage administrative fees. Over 13,500 producers have taken advantage of these incentives. Beginning farmers and ranchers have saved over $14.5 million in premiums and administrative fees because of this program.
“The Farm Bill included several reforms to the Federal crop insurance program; however, there remain further opportunities for improvements and efficiencies. The President’s 2017 budget includes two proposals to reform crop insurance, which are expected to save $18 billion over 10 years. This includes reducing subsidies for revenue insurance that insure the price at the time of harvest by 10 percentage points and reforming prevented planting coverage. These reforms will make the program less costly to the taxpayer while still maintaining a quality safety net for farmers.”
With respect to program integrity, Ms. Taylor stated that, “I am proud to report that the improper payment rate for Fiscal Year 2015 is 2.2 percent, down from 5.5 percent in FY 2014.”
An update yesterday at the National Sustainable Agriculture Coalition Blog (NSAC) provided an excellent recap of budget and appropriations issues that are impacting agriculture.
The NSAC update included a link to the House Agriculture Appropriations Subcommittee hearings for the FY2017 appropriations cycle that the Subcommittee held last month, as well as a recap of the remaining Subcommittee appropriations that concluded last week.
“‘The budget proposal is misguided by seeking to change a mandatory spending program through the appropriations process,’ Chairman Aderholt said.”
Yesterday’s NSAC update also explained that, “Ranking Member [Sam Farr (D., Calf.)] asked RMA Administrator Brandon Willis [prepared testimony] what is being done to make crop insurance work better for producers practicing sustainable, organic, and diversified agriculture. Administrator Willis mentioned Whole-Farm Revenue Insurance, and noted that the number of organic price elections has expanded significantly over the last several years. He committed to continuing to expand those opportunities.
“Similarly, Congresswoman [Chellie Pingree (D., Maine)] urged RMA to make it easier for producers to use conservation practices, such as cover crops, without having to fear losing their crop insurance. Producers who use cover crops must follow a complicated and sometimes confusing set of guidelines for terminating those crops in order to qualify for crop insurance. Pingree urged Administrator Willis to instead classify cover crop as a ‘good farming practice‘ so that producers can more easily pursue conservation efforts without fear of losing their insurance.”
The NSAC update added that: “Following weeks of lobbying for program support by fellow members, and public and private stakeholders, Members of Congress finally submit their appropriations requests to the Subcommittee this week. We expect the Subcommittee to begin reviewing those requests and writing its bill between now and early April. At this point, the Senate Agriculture Appropriations Subcommittee has held far fewer appropriations hearings than the House, so it may require considerably more time before it begins to write its own bill.”
Reuters writers Lisa Baertlein and Karl Plume reported yesterday that, “The U.S. Senate on Wednesday blocked a bill that would nullify state and local efforts to require food makers to label products made with genetically modified organisms, or GMOs, as the industry races to stop Vermont’s law from taking effect on July 1.
“The proposed legislation from Republican Senator Pat Roberts of Kansas comes amid growing calls for transparency in the U.S. food supply. Labeling advocates have criticized the bill as toothless because it leaves the decision to disclose GMO ingredients to the companies whose products contain them.
“Senate Bill 2609 is known as the Biotech Labeling Solutions Act by supporters and the Deny Americans the Right to Know, or DARK, Act by opponents. A procedural vote on Wednesday failed to reach the necessary 60 votes to advance the bill in the Senate, with 49 yes votes and 48 no votes.”
The article added that, “Roberts vowed to keep fighting as the July 1 deadline looms for Vermont’s labeling requirement to take effect.”
AP writer Mary Clare Jalonick reported yesterday that, “Republican senators were hoping to find compromise with Democrats who have supported mandatory labeling. The chairman of the Senate Agriculture, Nutrition and Forestry Committee, GOP Sen. Pat Roberts of Kansas, tweaked the bill that advanced from his committee this month to require the Agriculture Department to measure whether food companies were using voluntary labels. If not enough companies were doing so in three years, the department would require the labeling.
“But that wasn’t enough for most Democrats.”
An update today at the National Sustainable Agriculture Coalition blog explained that, “Anyone who thought the bill advanced on Wednesday seemed different from Roberts’ original legislation had valid reasons for feeling confused. The bill placed on the floor for consideration by Roberts was not the same bill as was approved by the Senate Agriculture Committee. Roberts had filed a substitute bill on Monday, which provided a path to mandating the industry-backed ‘SmartLabel‘ alternative to on-package labeling should 70 percent of the industry fail to adopt the system after a period of years. Simultaneous with the filing of the new bill, Senate Republican leadership immediately filed for cloture so as to limit debate and opportunities to amend the bill.”
And, Jason Huffman reported today at Morning Agriculture (Politico) that, “As expected, Roberts’ bill had trouble winning the support of Democrats. Just three crossed the aisle — Sens. Joe Donnelly (Ind.), Tom Carper (Del.) and Heidi Heitkamp (N.D.) — to vote in favor of cloture, while 41 voted against it. Eight Republicans, including Sens. Lisa Murkowski (Alaska), Rand Paul (Ky.) and Mitch McConnell (Ky.), voted against the bill, while 45 voted for it. McConnell’s no vote was procedural, so he could bring the bill up again later, his office confirmed.
“Sen. Amy Klobuchar (D-Minn.), who voted for the bill in the Senate Agriculture Committee, was among those to cast a ‘nay’ on the floor. The problem, she said, is that the concerns she raised at the time the committee was reviewing the measure still haven’t been fixed. ‘I remain hopeful that we can reach a compromise on a bill that avoids subjecting our entire food supply to a patchwork of state laws while creating a national uniform standard that works for consumers,’ she said.”
Christopher Doering added in today’s Des Moines Register that, “Roberts said earlier this week he would work on the bill once Congress returns from its Easter recess in April if it was unsuccessful Wednesday.
In addition, House Ag Committee Chairman Mike Conaway (R., Tex.) indicated in a statement yesterday that, “There are many marketing techniques available to provide consumers with information about the products they choose to purchase. Biotechnology is not an issue of safety. Therefore, government mandated warning labels having nothing to do with product safety and serve no purpose other than to disparage one product over another. These Senators cannot continue to say that they are advocates for America’s farmers and ranchers when they consistently oppose those who provide the food we eat and the clothes on our backs.”
Meanwhile, DTN Ag Policy Editor Chris Clayton provided an overview of reaction to the Senate vote in an article yesterday.
Several Senators took time to discuss the GMO food labeling issue on the Senate floor Wednesday, links and excerpts below:
(Note: Some Senators debated this issue on the Senate floor on Tuesday, a recap of remarks and links to transcripts from these discussions can be found here.)
Ag Committee Ranking Member Debbie Stabenow (D., Mich.)- (full transcript)- “Consumers want information about the food they eat, it is as simple as that. In fact, the bill continues the status quo on providing information to consumers. It lists a number of things, many of which are already being done, 1–800 numbers and so on. Look at the back of the pack; it lists things, but they are things that are already being done—not all but many, enough—and then says: We will keep the status quo nationally, but we will preempt the States and citizens around the country from taking individual action. I don’t support that. That is not good enough. It doesn’t reflect what we do when we are talking about Federal policy. That is one reason I think the approach put forward in the bill is the wrong path.”
Sen. Lisa Murkowski (R., Alaska)- (full transcript) highlighted issues associated with genetically engineered salmon -“Genetically engineered animals are not crops, and GE salmon is a genetically engineered animal…[M]y concern is that with the GMO bill before us now, it really does threaten the good progress we have made at this point in time.”
Sen. Dianne Feinstein (D., Calif.) (full transript)- “I also realize that California farmers may need to rely on genetic engineering to address challenges such as climate change and disease. But I do not understand why industry is so opposed to informing consumers of how their food was produced. The industry says it should only be required to label foods when there is a human health reason to do so. However, the Federal Government has always had labeling requirements for food that aren’t due to a human health reason. These requirements exist because they allow consumers to make informed choices in the marketplace.”
Ag Committee Chairman Pat Roberts (R., Kans.) (full transcript)- “The difficult issue for us to address is what to do about the patchwork of biotechnology labeling laws that will soon wreak havoc on the flow of interstate commerce, agriculture, and food products in every supermarket and every grocery store up and down Main Street of every community in America. That is what this is about. It is not about safety, it is not about health, and it is not about nutrition. It is all about marketing…[T]he fundamental role of the Agri- culture Committee is to protect American farmers and ranchers who provide a safe, abundant, and affordable food supply to a very troubled and hungry world. So I will be voting yes to do just that, and I encourage my colleagues to do the same. Voting no today means telling your constituents next week that you are raising their grocery bill by over $1,000. Good luck with that. It is a pretty simple vote. You are either for agriculture or you are not.”
Sen. Joe Donnelly (D., Ind.) (full transcript)- “This morning, my good friend, Senator TOM CARPER from Delaware, and I filed an amendment that builds off the framework of the proposal before us today. A framework I first suggested in the Agriculture Committee markup of this very bill. It creates a national voluntary bioengineered food labeling standard. It stipulates that if food companies fail to make sufficient information available, then a national food labeling standard for bio-engineering becomes mandatory.”
Sen. Jeff Merkley (D., Ore.) (full transcript)- “Here is the situation: The Nation is very cynical about this body. This body here, they say, isn’t responding to the concerns of the American citizens. Is there any single bill that has been more an example to justify that cynicism than this bill which is before us right now? When 9 out of 10 Americans say this is important to them, the majority of this body says: We don’t care. When 9 out of 10—or roughly that number—Democrats and Republicans and Independents all agree on something, this body says: We don’t care. Isn’t the cynicism of the American citizens justified?”
Jennifer Steinhauer and Stephanie Strom reported in today’s New York Times that, “The Senate will grapple this week with perhaps the most contentious issue in the food industry: whether the government should require mandatory labeling on foods containing genetically engineered ingredients.
“On Wednesday, the Senate is set to vote on a measure that would create voluntary national standards for labeling food with genetically modified ingredients. The bill would prevent states from mandating labels just before Vermont was set to become the first in the nation to impose such requirements.
“But the measure most likely lacks sufficient support from Democrats, most of whom would like to see a mandatory labeling program that offers food manufacturers different options for presenting the information, including a simple symbol. That means the legislation will almost certainly have to be revised.”
The Times article noted that, “This month, for example, the Corn Refiners Association released a study concluding that nationwide labeling — and a consequent shift in ingredients by food companies seeking to avoid the labels’ stigma — would raise the average family’s grocery bill by more than $1,000 a year.
“Maine and Connecticut have also adopted labeling standards, but those laws do not go into effect until other states in the region also pass laws.”
Meanwhile, John Bresnahan and Anna Palmer reported yesterday at Politico that, “Four organic-food industry executives held a fundraiser on Friday for Michigan Sen. Debbie Stabenow — the Senate’s leading Democrat on agriculture issues — just days before the chamber was set to take up a controversial bill with hundreds of millions of dollars on the line for U.S. food companies.”
The article added that, “A Stabenow aide said the fundraiser had been in the works for months and was not timed to coincide with action on the Republican-authored bill. The legislation, however, has been a topic of heated debate in Washington and the agricultural industry for months, and Stabenow played a key role in negotiations on the issue.
“On Tuesday, Stabenow sided with organic food companies and came out against the bill, authored by Agriculture Committee Chairman Pat Roberts (R-Kan.). Opponents argue the legislation fails consumers by preventing states from requiring labels on food products that contain genetically modified organisms, or GMOs. Stabenow’s opposition is a serious blow to the bill’s chances of clearing a Democratic filibuster.
“Stabenow’s office said there was nothing untoward about her participating in the fundraiser even as the Senate was set to begin debate on the GMO bill.”
Several Senators took time to discuss the GMO food labeling issue on the Senate floor Tuesday, links and excerpts below:
Snate Majority Leader Mitch McConnell (R., Ky.) (full transcript)- “The commonsense, bipartisan legislation offered by Chairman PAT ROBERTS of the Agriculture Committee would set clear, science-based standards in order to prevent families from being unfairly hurt by a patchwork of conflicting State and local labeling laws passed in places where they don’t even live. This bipartisan bill would help meet consumer interest for information about how food is made, while keeping costs from rising at every level of production.”
Senate Minority Leader Harry Reid (D., Nev.) (full transcript)- “Mr. President, 90 percent of Americans want to know what is in their food. All of Europe, China, Russia, they know what is in their food. We should know what is in our food. Senator STABENOW, the ranking member of the Agriculture Committee, has been trying to work to come up with some reasonable approach, but what she has gotten is not much help from the chair of the committee.”
Senators Jon Tester (D., Mont.) and Jeff Merkely (D., Ore.)- colloquy-(full transcript)- Sen. Tester: “Transparency in everything leaves better accountability and gives more power to average Americans, and that is also true when we talk about food. Free markets work when consumers have access to information. The U.S. Senate should not be in the business of hiding information from consumers.”
Sen. Merkley: “Well, in this Monsanto DARK Act 2.0 that has been put on the floor, there is a third option beyond the voluntary labeling and beyond the 1–800 numbers and QR code, and the third option—door No. 3, if you will—is that the company can put something on social media, which means, I assume, Instagram, Facebook, or who knows what. So if I am a customer and I am in the store and I see these three products and I want to find out if they have GE ingredients and there is no 800 number and there is no QR code because the company has chosen door No. 3, how am I to know that?”
Senate Ag. Committee Chairman Pat Roberts (R., Kan.) (full transcript)- “I have heard concerns that a voluntary-only standard would not provide consumers with enough information, even though there is no health, safety, or nutritional concern with this biotechnology. So we worked out a compromise to address these concerns by providing an incentive for the marketplace to provide more information. This legislation will allow the markets to work. However, if they do not live up to their commitments and information is not made available to consumers, then this legislation holds the market accountable. Under this proposal, a mandatory labeling program would go into effect only if a voluntary program does not provide significant information after several years…[T]his is not the first time this body has addressed this issue. In 2012 and 2013, Members of the Senate soundly rejected the idea of mandatory labeling for biotechnology. That is right. Both times more than 70 Members voted to reject mandatory labeling. This body then stood up for sound science and common sense, and I trust my colleagues will continue to stand up and defend sound science again.”
Sen. Barbara Boxer (D., Calif.) (full transcript)- “As a mom and as a grandma, I want to know what is in my food. Because of work we have done before, you do have to list how much sugar is in the product, which is so critical as we combat diabetes and other things. Sometimes you read that sugar content, and you think: Oh my God, I am going to get something else. And you can see how many carbs, how much fat. Why can’t you find out if the product is genetically modified? Seems to me, this is fair.”
Sen. Jeff Merkely (D., Ore.) (full transcript– including around a dozen letters from concerned voters on this issue that were sent to his office)- “Voting no tomorrow morning is the right vote if you believe in States’ rights. It is the right vote if you believe in the consumers’ right to know, the citizens’ right to know. And it is the right vote if you believe we shouldn’t have a process in this Chamber that just jams through something for a powerful special interest at the expense of the 9 or 10 Americans who want this information. So tomorrow, colleagues, let’s turn down this insult to the intelligence of Americans, this assault on States’ rights, this deprivation, this attack on the freedom of our citizens.”
Sen. Pat Leahy (D., Vt.) (full transcript)- “The bill we are considering today [the bill sponsored by Sen. Roberts] is a hasty reaction—a reaction with no real, open hearing—in response to a 2- year-old law that is set to finally take effect and doesn’t fully take effect until the end of this year. Instead of protecting consumers and trying to find a true compromise, this bill continues the status quo and tells the public: We don’t want you to have simple access to information about the foods you consume.”
Sen. John Hoeven (R., N.D.) (full transcript)- “So [the bill sponsored by Sen. Roberts] makes sure that we don’t have a patchwork of 50 State labeling laws. It sets up a voluntary program within 1 year. Then, if the information isn’t out there sufficient for consumers, it makes sure that USDA follows up and ensures that the information is provided and that it is provided in a variety of ways that work for consumers but also work for our farmers and ranchers and for the food industry so that we don’t raise costs for our consumers.”
Sen. Thom Tillis (R., N.C.) (full transcript)- “We are where we are because the Vermont law is not written in a way that merely impacts the citizens of Vermont. It is astonishing to hear the misleading claim that the Vermont law is about the right to know. If the Vermont law is about the right to know, why is it that the law exempts so many products?
“Here are some examples of the absurdity of the Vermont law. Vegetable cheese lasagna would be labeled, but meat lasagna wouldn’t. Soy milk would need to be labeled, but cow’s milk would not. Frozen pizza would need to be labeled, but delivered pizza would not. Chocolate syrup would need to be labeled, but maple syrup would not. Vegetable soup would need to be labeled, but vegetable beef soup would not. Food at a restaurant would be to- tally exempt, but not food at a grocery store. Vegetarian chili would need to be labeled, but meat chili would not. Veggie burgers made with soy would need to be labeled, but cheeseburgers would not. By my way of thinking, it is a patch work that doesn’t make sense if you are trying to come up with a consistent way to communicate to consumers what is in the food they are eating.”
Sen. Richard Blumenthal (D., Conn.) (full transcript)- “If there is scientific support for the health or environmental benefits, why not let consumers know? Let consumers make knowledgeable and informed choices. Consumers are capable of those kinds of choices, and I am shocked that this deliberative body is considering a measure that is crafted so purposefully and intentionally to, in effect, deceive the American public and actively deny them the accurate information they deserve. There is no question that this bill is nothing more than a carve-out for big businesses and mega-GMO seed corporations.”
“‘This legislation is a true compromise,’ said Chairman Roberts. ‘I have worked with my colleagues from both sides of the aisle to find a balance between consumers’ right to know and ensuring an even playing field in the marketplace.'”
The release added that, “Votes on the legislation are expected as early as Wednesday.”
Yesterday, senators began to speak in more detail about these two legislative measures.
Senate Majority Leader Mitch McConnell (R., Ky.) noted that, “Vermont recently passed food-labeling legislation that according to one study could increase annual food costs by more than $1,000 per family. These aren’t just Vermont families I am talking about; these are families all across our country.
“The Senate will soon consider commonsense, bipartisan legislation that aims to ensure that decisions in one State or a patchwork of different State laws do not hurt American families throughout our country—especially at a time when so many are already struggling to make ends meet. The goal is to set clear, science-based standards in order to prevent families from being unfairly hurt by a patch- work of conflicting local and State labeling laws passed in States and cities where they don’t even live.
“I would like to recognize the chairman of the Agriculture Committee, Senator ROBERTS, for his continuing work on this issue. The Agriculture Committee moved to pass the chairman’s mark last week with bipartisan support. I know Chairman ROBERTS continues to work with Senator STABENOW, the ranking member, and others across the aisle on a pathway forward on legislation we can pass in the Senate to resolve this issue. I urge Members to continue working with him in that endeavor.
“Let’s not forget that this may well be our last chance to prevent the actions of one State—just one State—from hurting Americans in all the other States. Legislation to address this issue passed the House last summer with bipartisan support. With cooperation from across the aisle, we can take action on a bipartisan basis here on the Senate floor as well.”
On the other hand, Senate Minority Leader Harry Reid (D., Nev.) indicated that, “Madam President, GMO, genetically modified food—that is basically what it is. What we want is to make sure consumers know what is in their food. They deserve clear standards. They require the disclosure of what is in their food, not a voluntary standard that Senator ROBERTS is talking about bringing out of the committee. All that does is leave consumers in the dark, and that is the wrong way to go.”
And Sen. Merkley, who has regularly addressed this issue on the Senate floor over the past several days (see here, here, and here), also spoke about the GMO labeling issue again yesterday.
In part, Sen. Merkley noted that, “Right now Vermont is a laboratory. On July 1 they are going to have their first labeling law in the country, and that is an experiment that their citizens wanted, consistent with 9 out of 10 Americans who want to know. They responded; Vermont responded. They are the first State in the Union to do so. Are we going to cut that short? We are going to trash that ability of Vermont to conduct this experiment? We are going to stomp on the citizens’ rights to know, not just in Vermont but in Oregon, Montana, Florida, and all 50 States, and throw in a few U.S. terri- tories as well?
“Now the argument is made that this is very dangerous because there could be multiple States that produce different standards. But that doesn’t exist. There will not be multiple States in July. There is only one State that has a bill. So it is a phony argument to say that this is somehow causing big, expensive problems because there are conflicting State standards, because there are no conflicting State standards. It is just one great State that responded to its citizens’ desires. Who are we to stop that experiment now? We should endorse that experiment. We should endorse that State laboratory. We should watch to see how well it works. We know citizens want this and that they care a lot. So why take it away just because Monsanto and friends don’t want Americans to know?”